My goal is to provide valuable information for home buyers, both First Time Buyers and Move Up Buyers. This information will be about loan programs such as FHA ,VA, Conventional Fannie Mae and Freddie Mac, Reverse Mortgages, and even Portfolio Jumbo programs. I will also touch on tax advantages of homeownership, Rent vs. Own analysis, and any other aspect of loans and home ownership that will be of interest to Orange County home buyers and homeowners.

The FHA loan limits for Orange County, CA had temporarily dropped from $729,750 down to $625,500 on October 1, 2011. But on Friday, November 19, President Obama signed a new bill that reinstates the higher loan limits for FHA loans in high cost areas, like Orange County and Los Angeles County. FHA, which only requires a 3.5% down payment, offers a solution for families with enough earning power to afford the payment on a $729,750 loan, but haven't a 20% down payment.

Purchase an Orange County Home for $750,000 with 3.5% Down Payment

While a typical Conventional (Fannie Mae or Freddie Mac) loan program requires a 20% down payment to purchase a $750,000 home, FHA only requires 3.5%. The FHA down payment would only be $26,250, versus $150,000 down using a Fannie/Freddie program. Assuming a final FHA loan amount of $730,987 (including the 1% Upfront Mortgage Insurance Premium) at an interest rate of 4% (4.773 APR), the principal and interest payment would be $3,513. The Monthly Mortgage Insurance would be $693. Taxes and insurance would be approximately $937. (Using 1.25% for property tax rate and .25% for insurance rate.) The total PITI (principal, interest, taxes and insurance) would be approximately $5,143. Approximately $3,200 of this is deductible mortgage interest and property taxes. A family with income of $150,000 would qualify for this, depending on their other monthly debt payment and credit. And of course, the income needs to be fully documentable.

It is of course important for a family looking to purchase a home to make sure the new mortgage payment fits in with their budget and future goals. Make sure money is left over for savings, college funding, and meals and entertainment. Also, consulting with a CPA is an important step in determining how the mortgage interest deduction will effect income taxes for the better.

The Perfect Storm - Low Rates and Affordable home Prices

Affordability has not been this good in over 30 years. In many parts of California it is now cheaper to own a home than to rent the same home. This is why so many real estate investors are building their portfolios with single family homes and condos. They are able to rent the home for more than the mortgage payment. Orange County renters who are considering a home purchase should first contact an Orange County lender who can provide custom loan scenarios based on their qualifications and goals. The scenarios should show them a side by side analysis of the different loan options available. Besides the FHA loan program, the VA loan program is also an excellent option, allowing for 100% financing up to a $700,000 home price in Orange County. There are also some high loan to value options available with Conventional financing using Private Mortgage Insurance (PMI). The first step is to investigate all the potential financing options and then determine which is best for you.